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MS Windows Profits Take Unexpected Dip in 2011

by John Lister on January, 26 2012 at 08:01AM EST

Microsoft has just revealed that Windows was not its leading money-maker during the last three months of 2011. While this is shocking news to many, it may be only a short-term quirk, and, generally speaking, Microsoft continues to rake in the cash.

For the three months ending December 31, the company took in a total of $20.89 billion, up five per cent over the same period in 2010.

Once costs were deducted, Microsoft was left with just under $8 billion in profit for the quarter, down about two per cent, year-over-year. Both figures were very close to the consensus of predictions by stock market analysts.

Server and Tools Division the Revenue Leader

What few expected was that Microsoft's Windows division did not chalk up the largest share of the company's income.

In fact, the Windows and Windows Live division saw a drop in its fourth-quarter revenue from $5 billion last year to $4.75 billion this year, and a drop in its quarterly profits from $3.2 billion to $2.85 billion.

That made Windows third in generating revenue for the quarter, behind the Server and Tools division, which took in around $36 million more than Windows, and the Business division, which generated $6.2 billion. The Windows division did beat out the Server and Tools division in terms of generating profit. (Source: microsoft.com)

Sales Dip May Be Temporary

One possible reason Windows did less business than last year is that many buyers, particularly in the corporate world, may be holding off buying new computers until Windows 8 is released.

Another may be that the severe shortage of hard drives caused by major flooding in Thailand may be limiting delivery of computers in general.

While both of these factors will continue, potentially causing Microsoft problems for a while, they are only temporary.

The fourth quarter's financial results also showed strength in the Entertainment and Devices division, which is driven largely by sales of the Xbox 360 console, and which took in almost as much revenue as Windows. This was helped partly by the ongoing success of the Kinect motion control system.

That said, Microsoft has played down these sales figures, noting that a glut of unsold consoles may remain in stores at the moment, suggesting the company won't ship as many as expected during the next few months. (Source: cnet.com)